Help is, it appears, at hand

No one is useless in this world who helps lighten the burdens of another.

It’s not Help to Buy, but it will Help to Buy.  Prime Minister Andy Burnham is to introduce a new scheme to try to help people onto the property ladder, specifically those who may have given up hope of  ever doing so.

It’s to be called Your First Home, which does makes me think ever so slightly of Playmobil and Lego, but what it’s called is of less import than what it does and how it can help.  It’ll be available to first-time buyers in England who can muster a deposit of 2.5%, and would be a loan of up to 20% of their new build property’s value to help pay for it.

That’s a real, one hand-other hand dilemma. If it’s helping first time buyers to acquire new build properties then it will help to boost the housebuilding market, kick starting all that extra knock-on spending that we know is attached to it. The fact that housebuilders’ share value shot up on the back of the announcement is testament to that.

However. On the other hand, there is a great deal of good to be had from something that kick starts the market for ‘second hand’ homes. Not every first-time buyer is going to want to buy a newbuild property. And there is just as much knock-on  activity to be had for the RMI market.  Every pre-loved property that’s sold to a first-time buyer represents another person or family purchasing something else, from someone who then goes on to buy a different property, and so on. It’s called a chain, and every link it in brings benefits for businesses involved in the RMI market, whether they be builders, builders’ merchants, plumbers, developers, kitchen specialists, landscape gardeners or candlestick makers.

If it is well-designed and easy to access, Your First Home has the potential to boost demand, encourage investment in housing, and support sustainable growth across the industry. Right now we need this, big time.

Every policy has its detractors, and of course, the Conservatives issued their warnings. These were centred around the fact that it would encourage young people to take on more debt, and that it would risk pushing up the price of new homes. Well, yes it very well might. As, indeed, the previous Help to Buy scheme did. That was introduced under, let me see – checks the archives – George Osborne when he was Conservative Chancellor serving in the coalition government.  If you make something easier to buy, you do run the risk of increasing its price. It’s one of the quirks of the way our housing market works.

So, I hope that this administration has looked at the issues with the previous incarnation, and taken heed of the pitfalls. Because all politicians  and civil servants do that, don’t they?

Regardless, it is something that this industry has been asking for for some time. NBG’s Mark Hughes did so in the pages of this august publication no less, and the BMF’s letter to the Chancellor asked for, among other things, “A new equity loan scheme to help First-Time Buyers access new-build mortgages”.

That, it seems, has been granted. Will we also see the rest of the wish list: Reform of Stamp Duty, including a 1% rate for First-Time Buyers and people looking to move to more appropriately sized houses, action on the ever-growing cost of employing people and running a business and, the biggie for family-owned businesses, the restoration of 100% Business Property Relief.

The devil, as always, will be in the detail of John Healey’s first Budget next month, but it seems there will be an initial interest-free period for the equity loan.

There was a lot to unpick in Andy Burnham’s first address to the Labour Party Conference as PM, and I will have to return to it at another time. For now though, there were plenty of the right words coming off that podium, words spoken with passion. Now we need to see the details.